effective from 2019. A discretionary "counter-cyclical buffer" allowing national regulators to require up to an additional 2.5% of RWA as capital during periods of high credit growth. This must be met by CET1 capital. Leverage ratio Basel III introduced a minimum "leverage ratio" from 2018 based on a leverage exposure definition published in 2014. A revised exposure definition and a buffer for globally systemically important banks (G-SIBs) will be effective from 2023. The ratio is calculated by dividing Tier 1 capital by the bank's leverage exposure. The leverage exposure is the sum of the exposures of all on-balance sheet assets, 'add-ons' for derivative exposures and securities financing transactions (SFTs), and credit conversion factors for off-balance sheet items. The ratio acts as a back-stop to the risk-based capital metrics. The banks are expected to maintain a leverage ratio in excess of 3% under Basel III. For typical mortgage lenders, who underwrite assets of a low risk weighting, the leverage ratio will often by the binding capital metric. In 2013, the U.S. Federal Reserve announced that the minimum Basel III leverage ratio would be 5% for eight systemically important financial institution (SIFI) banks and 6% for their insured bank holding companies. In the EU, whilst banks have been required to disclose their leverage ratio since 2015, a binding requirement has not yet been implemented. The UK operates its own leverage ratio regime, with a binding minimum requirement for banks with deposits greater than £50bn of 3.25%. This higher minimum reflects the PRA's differing treatment of the leverage ratio, which excludes central bank reserves in 'Total exposure' of the calculation. Liquidity requirements Basel III introduced two required liquidity/funding ratios. The "Liquidity Coverage Ratio", which requires banks to hold sufficient high-quality liquid assets to cover its total net cash outflows over 30 days under a stressed scenario. Mathematically it is expressed as follows: The Net Stable Funding Ratio requires banks to hold sufficient stable funding to exceed the required amount of stable funding over a one-year period of extended stress. US version of the Basel Liquidity Coverage Ratio requirements In 2013, the Federal Reserve Board of Governors approved an interagency proposal for the U.S. version of the Basel Committee on Banking Supervision (BCBS)'s Liquidity Coverage Ratio (LCR). The ratio would apply to certain U.S. banking organizations and other systemically important financial institutions. The United States' LCR proposal came out significantly tougher than BCBS's version,